Market Insight

Zenterio acquires Adscribe

January 03, 2017  | Subscribers Only

Cecilia Zhu Cecilia Zhu Research Analyst, Service Provider Technology

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TV operating system provider Zenterio has acquired the remaining 75% of the advertising technology (ad-tech) company Adscribe, which enables advertising within the electronic program guide (EPG). Adscribe offers interactive ads that allow consumers to click on banners or other formats and receive further details on a microsite or associated app. The strategic partnership between Zenterio and Adscribe has been established since 2015, when Zenterio initially acquired 25% of Adscribe. Based in Sweden and UK respectively, the two companies are teaming up to advance analytics that will inform advertising.

Our Analysis:

A full acquisition means that Zenterio is determined to strengthen its collaboration with Adscribe and enhance its advertising and analytics capabilities to provide more attractive value packages to its Pay TV operator customers. In the pay TV market where traditional revenue streams are levelling off, and where pay TV operators are looking for new opportunities for monetisation, the Zenterio acquisition is well aligned with service providers’ needs.

From Dynamic Ad Insertion to programmatic ads, advanced advertising solutions have proved appealing to pay TV operators and vendors. It allows them to monetise their vast amount of consumer data and diversify their revenue streams to include advertising. TV operators with a direct relationship to consumers through credit card details and login details are in an advanced position to develop advertising services in an environment where the ad industry itself is becoming increasingly data-driven.

In particular, set-top data is valuable as a source of data and analysis, as it helps measure advertising effectiveness and develop more targeted ads. User data collected from STBs provides insights into how TV and advertisements are being watched. This is increasingly important in a multiscreen world where operators don’t necessarily charge additional fees for using multiscreen services and struggle to monetise them effectively. Operators will need to have advanced systems for capturing data that allow them to come up with a wider range of packages and pricing structures to balance the changing viewing behaviours with acquisition costs and margins.

This deal represents Zenterio’s strategy for integrating interactive advertising into TV offerings through a back-end middleware solution. As a STB software provider, Zenterio provides middleware for interactive TV but lacks the advertising and analytics capabilities. The company has been developing a Value Added Services (VAS) proposition, where it focuses on user experience, interactive advertising, content discovery and other extra services that go beyond an OS. The current Zenterio OS is already integrated with AdScribe’s solutions for data analytics, applications and advertising. Adscribe, in many respects, meets the needs of Zenterio as it specialises in the ad-tech space and offers a cloud-based big data platform to brands and content owners.

Adscribe mainly focuses on EPG advertising through banners and videos. Consumers spend a considerable time on the EPG finding content to watch; according to Zenterio, this amounts to 23 minutes a day in the US. This is screen time that has not been systematically monetised yet in the same way as the time people spend watching programs. However, the value of EPG inventory is lower than that of inventory within the actual program stream. IHS Markit believes that EPG advertising, while growing through data analytics, will remain a niche phenomenon. The interactive component that Adscribe highlights in its offering reminds of red button and green button advertising which has never taken off entirely.

And more widely, this deal shows that collaboration is becoming crucial for companies who want to capitalise on advertising through technology. The partnerships between pay TV operators, advertisers and middleware vendors are being redefined: Operators can help advertisers reach wider audiences with minimal waste and target specific audience segments, and middleware vendors can enable the ad features through integration, which shortens the time-to-market and reduces the cost for operators. It is likely to see more consolidations in the advanced TV advertising market.

Organization
Zenterio
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